Bigg Successbudgets | Bigg Success http://biggsuccess.com Life On Your Own Terms Fri, 25 May 2012 12:00:08 +0000 en hourly 1 http://wordpress.org/?v=3.2.1 2006-2011 bigginfo@biggsuccess.com (Bigg Success) bigginfo@biggsuccess.com (Bigg Success) posts 1440 Life On Your Own Terms Bigg Success Bigg Success bigginfo@biggsuccess.com No no http://biggsuccess.com/wp-content/uploads/2010/02/Showlogo-144_144.jpg Bigg Success http://biggsuccess.com 144 144 My Employer is Eliminating 401(k) Matches http://biggsuccess.com/2009/01/26/my-employer-is-eliminating-401k-matches/ http://biggsuccess.com/2009/01/26/my-employer-is-eliminating-401k-matches/#comments Mon, 26 Jan 2009 07:00:09 +0000 George Krueger & Mary-Lynn Foster http://biggsuccess.com/?p=1536 retirement Companies are responding aggressively to the bad economic news. Layoffs, hiring freezes, and salary freezes have been some of the most common actions so far.

___

___

Now, more and more employers are looking at eliminating the matching of 401(k) contributions. According to a survey by Watson Wyatt, the global human resources and financial services firm, things are changing quickly. In October, 2% of firms said they had already cut back on these matches and 4% said they planned to. Two months later, in December, 3% had already made the cut and 7% said they intended to.

And these are large companies. Established brands that we all know. Motorola, FedEx, Kodak, and Starbucks just to name a few.

They’re usually using the word “suspend” rather than “eliminate” when they announce these cuts. But it raises a question:

If my employer stops matching my contribution to my
401(k), should I still keep making contributions myself?

It forces us to save

This is perhaps the biggest reason to keep making contributions. Financial planners have said for years that we should pay ourselves first. Investing it before we get it, as we do with our 401(k), is the best way to make sure that happens.

Most people report that they don’t really miss the money. It’s like the taxes that are deducted from our paychecks – the government knows most of us won’t miss the money if we don’t see it.

Of course, there are ways to set up an automatic deduction from our checking or savings account for investments outside of a 401(k). That’s really close to having it deducted from our paycheck, but it’s not quite the same. That little variation can make a bigg difference for some people. You have to judge that for yourself.

Higher limits

The next best option to a 401(k) for most people would be an IRA because contributions may also be deductible. You should check with your financial advisor about the specifics of your situation.

Because you invest before paying taxes, it’s as if the government is making part of the contribution for you. For example, if you made a $1,000 contribution to one of these retirement plans and you’re in the 25% tax bracket, you would pay $250 less in taxes. So, in essence, you’re only out of pocket $750.

With either plan, you don’t pay taxes on the money you earn on your investments until you pull it out. Deductible and deferred – that’s a pretty powerful combination.

Where the 401(k) gains favor is that it has higher maximum limits – your contributions to your 401(k) can total up to $16,500 in 2009 ($22,000 if you’re over 50). You can’t contribute more than $5,000 to an IRA in most cases.

If my employer cuts or eliminates my 401(k) match, are there
reasons to fund my retirement through another vehicle?

A lot of 401(k) plans offer fairly limited investment options and you may pay lower fees in a plan that’s not a 401(k). 

__

Get the tips and tools you need to be a BIGG success.
Subscribe to the Bigg Success Weekly – it’s FREE!

___

The bigger issue

It’s not like we don’t already have a sense of it. But recent months have reinforced this paradigm. We can’t count on anyone or anything for any part of our financial future. We must take full control of our own finances. We have to build our own safety nets to make sure we are financially secure.

How much will you have at retirement?

It really boils down to three factors:

  • how much we invest

  • how much we earn on our investment (after all fees and taxes)
  • how long it is invested

From these three factors, we see that we have three options if we don’t want to retire on less money:

1st – We can try to earn more on the money we invest.
That involves taking more risk and we don’t have much appetite for that right now. So this probably isn’t going to fly with most of us.

2nd – We can postpone our retirement.
This buys us more time. People who are really close to retirement right now may not have much of a choice. They may have to do this. But if you still have some time on your side, there may be a better way.

3rd – We can increase our contributions.
Look at your budget and see if there is any way you can make up for the investment your company was making.

If your employer reinstates matching contributions, you can stop contributing at the increased rate and enjoy the extra money in your budget … or …

… you can keep making your higher contributions to give your retirement a kick!

To all our readers in Australia, happy Australia Day! And we hope our friends in India enjoy Republic Day!

And thank you so much for spending time with us today. Join us next time when we discuss extreme multi-tasking. Until then, here’s to your bigg success!

Subscribe to The Bigg Success Show in iTunes. 

Subscribe to the Bigg Success feed.

Direct link to The Bigg Success Show audio file:
http://media.libsyn.com/media/biggsuccess/00316-012609.mp3

Related posts

What’s Hot in 2009: Threats

I Need Money! Should I Borrow from my Retirement Plan?

I Need Money! Should I Cut Back on My Retirement Plan Contributions?

I Need Money! Should I Cash Out My Retirement Plan?

(Image in today's post by woodsy)

]]> http://biggsuccess.com/2009/01/26/my-employer-is-eliminating-401k-matches/feed/ 2 00:01:01 Companies are responding aggressively to the bad economic news. Layoffs, hiring freezes, and salary freezes have been some of the most common actions so ... Companies are responding aggressively to the bad economic news. Layoffs, hiring freezes, and salary freezes have been some of the most common actions so far. ___ ___ Now, more and more employers are looking at eliminating the matching of 401(k) contributions. According to a survey by Watson Wyatt, the global human resources and financial services firm, things are changing quickly. In October, 2% of firms said they had already cut back on these matches and 4% said they planned to. Two months later, in December, 3% had already made the cut and 7% said they intended to. And these are large companies. Established brands that we all know. Motorola, FedEx, Kodak, and Starbucks just to name a few. They#8217;re usually using the word #8220;suspend#8221; rather than #8220;eliminate#8221; when they announce these cuts. But it raises a question: If my employer stops matching my contribution to my 401(k), should I still keep making contributions myself? It forces us to save This is perhaps the biggest reason to keep making contributions. Financial planners have said for years that we should pay ourselves first. Investing it before we get it, as we do with our 401(k), is the best way to make sure that happens. Most people report that they don#8217;t really miss the money. It#8217;s like the taxes that are deducted from our paychecks #8211; the government knows most of us won#8217;t miss the money if we don#8217;t see it. Of course, there are ways to set up an automatic deduction from our checking or savings account for investments outside of a 401(k). That#8217;s really close to having it deducted from our paycheck, but it#8217;s not quite the same. That little variation can make a bigg difference for some people. You have to judge that for yourself. Higher limits The next best option to a 401(k) for most people would be an IRA because contributions may also be deductible. You should check with your financial advisor about the specifics of your situation. Because you invest before paying taxes, it#8217;s as if the government is making part of the contribution for you. For example, if you made a $1,000 contribution to one of these retirement plans and you#8217;re in the 25% tax bracket, you would pay $250 less in taxes. So, in essence, you#8217;re only out of pocket $750. With either plan, you don#8217;t pay taxes on the money you earn on your investments until you pull it out. Deductible and deferred #8211; that#8217;s a pretty powerful combination. Where the 401(k) gains favor is that it has higher maximum limits #8211; your contributions to your 401(k) can total up to $16,500 in 2009 ($22,000 if you#8217;re over 50). You can#8217;t contribute more than $5,000 to an IRA in most cases. If my employer cuts or eliminates my 401(k) match, are there reasons to fund my retirement through another vehicle? A lot of 401(k) plans offer fairly limited investment options and you may pay lower fees in a plan that#8217;s not a 401(k).#160; __ Get the tips and tools you need to be a BIGG success. Subscribe to the Bigg Success Weekly #8211; it#8217;s FREE! ___ The bigger issue It#8217;s not like we don#8217;t already have a sense of it. But recent months have reinforced this paradigm. We can#8217;t count on anyone or anything for any part of our financial future. We must take full control of our own finances. We have to build our own safety nets to make sure we are financially secure. How much will you have at retirement? It really boils down to three factors: how much we invest how much we earn on our investment (after all fees and taxes) how long it is invested From these three factors, we see that we have three options if we don#8217;t want to retire on less money: 1st #8211; We can try to earn more on the money we invest. That involves taking more risk and we don#8217;t have much appetite for that right now. So this probably isn#8217;t going to fly with most of us. 2nd #8211 Financial,Freedom,,Money bigginfo@biggsuccess.com no No These Forgotten Costs Often Sink Us http://biggsuccess.com/2008/11/17/these-forgotten-costs-often-sink-us/ http://biggsuccess.com/2008/11/17/these-forgotten-costs-often-sink-us/#comments Mon, 17 Nov 2008 06:30:39 +0000 George Krueger & Mary-Lynn Foster http://biggsuccess.com/?p=1386 sunken_boat We try not to make financial decisions in a vacuum. We strive to factor in all the relevant pieces before making a major purchase. But there are some costs that we often fail to factor in that can make a significant difference.

We often fail to factor in future flows of money.

___

___

We expect a certain percentage pay raise. So we spend money as if it has already happened. It’s especially important in times like these that we don’t spend money before we know we have it.

Another thing we often do is count on a bonus. If it doesn’t materialize, we’re in trouble as we learned from Clark Griswold in Christmas Vacation. We sure don’t want our brother tying up our boss!

What about increased insurance costs? Is it likely that you’ll pay more for health insurance next year? How about insurance for your house or car? Insurance costs can rise significantly from year to year.

Do you have a variable rate mortgage? Have you considered a projected increase in the rate and the associated increase in your mortgage payment?

Have you thought about what might happen with recurring expenses? Cable bills, power bills, and water bills all seem to rise from year to year.

Affording it now isn’t good enough

You may finance a major purchase. Sure it’s only $100 a month. You can cover it now. But if it stretches your budget to its limit, it’s likely you won’t be able to cover it next year. You’ll start sinking and soon end up underwater, in a financial sense. You’ll run out of money before you run out of month!

It’s important to have a safety net – spending less than what you make each month.

A tool businesses use

We often don’t think about it this way, but we all run an organization – our households. Just like any organization, we have inflows and outflows of money.

Reasonably sophisticated business people work from a budget. Yes, the “b” word. Many people do treat budgets like a dirty word. But they’re a great tool.

And they’re especially important if you don’t have any money left over at the end of the month. It’s important to understand why. You can use Quicken, Excel or any number of ways to create your budget.

Many business people don’t just budget for one year. They look at projections over three years or more. These budgets don’t have to be elaborate – just plot out your main sources of inflows and outflows.

The power of the tool

Once you have a budget set up, you can look at “what if” scenarios. For example, what if:

  • you don’t get a pay raise

  • you (or your spouse) lose a job
  • the cost of health insurance (or any other cost) rises more than you expect?
  • you make this major purchase?

When you create a budget, you’re applying Stephen Covey’s “begin with the end in mind” and “put first things first” (from The 7 Habits of Highly Effective People) to your finances. You’re considering all your costs – both now and in the future. Then you can see the impact of major purchases on your overall finances so you make the best decision going forward.

You can run your finances intentionally, rather than ad hoc. You can prepare for contingencies so you survive no matter what. Then you can shift your focus to thriving!

___

Get the tips and tools you need to be a BIGG success!
Subscribe to the Bigg Success Weekly – it’s FREE!

___

Thanks for stopping by today. Next time, we’ll discuss how assumptions we make about time leave us overextended. Until then, here’s to your bigg success!

Subscribe to The Bigg Success Show in iTunes. 

Subscribe to the Bigg Success feed.

Direct link to The Bigg Success Show audio file:
http://media.libsyn.com/media/biggsuccess/00266-111708.mp3

Related posts

Don’t Make This Costly Mistake

Getting Aggressively Passive: Creating A Passive Income That Sets You Free

How To Get Rich

6 Easy Steps To Financial Freedom

(Image by bbrouw83)

]]> http://biggsuccess.com/2008/11/17/these-forgotten-costs-often-sink-us/feed/ 0 00:01:01 We try not to make financial decisions in a vacuum. We strive to factor in all the relevant pieces before making a major purchase. ... We try not to make financial decisions in a vacuum. We strive to factor in all the relevant pieces before making a major purchase. But there are some costs that we often fail to factor in that can make a significant difference. We often fail to factor in future flows of money. ___ ___ We expect a certain percentage pay raise. So we spend money as if it has already happened. It#8217;s especially important in times like these that we don#8217;t spend money before we know we have it. Another thing we often do is count on a bonus. If it doesn#8217;t materialize, we#8217;re in trouble as we learned from Clark Griswold in Christmas Vacation. We sure don#8217;t want our brother tying up our boss! What about increased insurance costs? Is it likely that you#8217;ll pay more for health insurance next year? How about insurance for your house or car? Insurance costs can rise significantly from year to year. Do you have a variable rate mortgage? Have you considered a projected increase in the rate and the associated increase in your mortgage payment? Have you thought about what might happen with recurring expenses? Cable bills, power bills, and water bills all seem to rise from year to year. Affording it now isn#8217;t good enough You may finance a major purchase. Sure it#8217;s only $100 a month. You can cover it now. But if it stretches your budget to its limit, it#8217;s likely you won#8217;t be able to cover it next year. You#8217;ll start sinking and soon end up underwater, in a financial sense. You#8217;ll run out of money before you run out of month! It#8217;s important to have a safety net #8211; spending less than what you make each month. A tool businesses use We often don#8217;t think about it this way, but we all run an organization #8211; our households. Just like any organization, we have inflows and outflows of money. Reasonably sophisticated business people work from a budget. Yes, the #8220;b#8221; word. Many people do treat budgets like a dirty word. But they#8217;re a great tool. And they#8217;re especially important if you don#8217;t have any money left over at the end of the month. It#8217;s important to understand why. You can use Quicken, Excel or any number of ways to create your budget. Many business people don#8217;t just budget for one year. They look at projections over three years or more. These budgets don#8217;t have to be elaborate #8211; just plot out your main sources of inflows and outflows. The power of the tool Once you have a budget set up, you can look at #8220;what if#8221; scenarios. For example, what if: you don#8217;t get a pay raise you (or your spouse) lose a job the cost of health insurance (or any other cost) rises more than you expect? you make this major purchase? When you create a budget, you#8217;re applying Stephen Covey#8217;s #8220;begin with the end in mind#8221; and #8220;put first things first#8221; (from The 7 Habits of Highly Effective People) to your finances. You#8217;re considering all your costs #8211; both now and in the future. Then you can see the impact of major purchases on your overall finances so you make the best decision going forward. You can run your finances intentionally, rather than ad hoc. You can prepare for contingencies so you survive no matter what. Then you can shift your focus to thriving! ___ Get the tips and tools you need to be a BIGG success! Subscribe to the Bigg Success Weekly #8211; it#8217;s FREE! ___ Thanks for stopping by today. Next time, we#8217;ll discuss how assumptions we make about time leave us overextended. Until then, here#8217;s to your bigg success! Subscribe to The Bigg Success Show in iTunes.#160; Subscribe to the Bigg Success feed. Direct link to The Bigg Success Show audio file: http://media.libsyn.com/media/biggsuccess/00266-111708.mp3 Related posts Don#8217;t Make This Costly Mistake Getting Aggressively Passive: Creating A Passive Income That Sets Money bigginfo@biggsuccess.com no No Squirrels, Nuts and Business Cycles http://biggsuccess.com/2008/10/06/squirrels-nuts-and-business-cycles/ http://biggsuccess.com/2008/10/06/squirrels-nuts-and-business-cycles/#comments Mon, 06 Oct 2008 05:30:31 +0000 George Krueger & Mary-Lynn Foster http://biggsuccess.com/?p=1297 squirrel You might think that our title has something to do with the recent behavior of Wall Street and Washington. It probably could, but in this case, it doesn’t.

___

___

It does refer to seasons. We’re in the Midwestern United States. We’re heading into fall which, of course, means winter is just around the corner. Squirrels are busy hoarding up nuts so they will have the food they need to sustain them through the winter months.

Hot and cold, boom and bust

Like the seasons, our economy moves through times when things are hot and times when they’re cold. We experience booms and busts.

It’s interesting, though, that our friends in the southern hemisphere are just heading into spring. Things are heating up there while they’re cooling down here! It reminds us that most businesses do best during the boom times, but some actually prosper when times are tough.

Almost every business has products or services that will do better when the economy isn’t doing as well. With your offerings, which ones will save your clients money? Those are the items you should promote now as consumers seek to stretch their budget.

Your cash stash

Speaking of stretching our budgets, just like squirrels hoarding nuts for winter, we should all make sure we have an emergency cash reserve. Financial planners recommend keeping between three to six months of living costs stashed safely away for ready access.

In recent times, some have suggested a Home Equity Line-of-Credit could be substituted for this cash reserve. Only you can decide if that’s the right option for you; however, with what’s going on with banks and the credit markets, it may pay not be your best option for your crucial cash stash.

If you own a business, you should also look at your working capital. Is it adequate to take you through a slow season? If not, look for ways to cut your costs so you can shore up your cash hoard.

Purchasing out of season

The seasons also create opportunities for us when we’re purchasing. For example, if you live where we live, you’ll probably get a better deal right now on a lawn mower than a snow blower. Timing your purchase when demand is down on these bigg ticket items can save you money.

Tougher times also create opportunities for us as consumers. Businesses still have bills to pay. They want to keep the doors open. So they may cut deals now that they would never consider in good times.

Purchasing in season

With other items, you’re better off buying in season. Retailers will often lure you to their stores by drastically discounting these items. For example, isn’t turkey cheaper right before Thanksgiving than any other time?

Smart Money has a great article about the best time to buy everything. Planning when to buy is just as important as what you buy. Buying on impulse less often will save you bigg money more often!

___

Get the tips and tools you need to be a BIGG success!
Subscribe to the Bigg Success Weekly – it’s FREE!

___

Next time, we ask, “Are you a victim of your own success?” Until then, here’s to your bigg success!

Subscribe to The Bigg Success Show in iTunes. 

Subscribe to the Bigg Success feed.

Related posts

6 Easy Steps To Financial Freedom

Getting Aggressively Passive: Creating A Passive Income That Sets You Free

(Image by tome213)

]]> http://biggsuccess.com/2008/10/06/squirrels-nuts-and-business-cycles/feed/ 1 00:01:01 You might think that our title has something to do with the recent behavior of Wall Street and Washington. It probably could, but in ... You might think that our title has something to do with the recent behavior of Wall Street and Washington. It probably could, but in this case, it doesn#8217;t. ___ ___ It does refer to seasons. We#8217;re in the Midwestern United States. We#8217;re heading into fall which, of course, means winter is just around the corner. Squirrels are busy hoarding up nuts so they will have the food they need to sustain them through the winter months. Hot and cold, boom and bust Like the seasons, our economy moves through times when things are hot and times when they#8217;re cold. We experience booms and busts. It#8217;s interesting, though, that our friends in the southern hemisphere are just heading into spring. Things are heating up there while they#8217;re cooling down here! It reminds us that most businesses do best during the boom times, but some actually prosper when times are tough. Almost every business has products or services that will do better when the economy isn#8217;t doing as well. With your offerings, which ones will save your clients money? Those are the items you should promote now as consumers seek to stretch their budget. Your cash stash Speaking of stretching our budgets, just like squirrels hoarding nuts for winter, we should all make sure we have an emergency cash reserve. Financial planners recommend keeping between three to six months of living costs stashed safely away for ready access. In recent times, some have suggested a Home Equity Line-of-Credit could be substituted for this cash reserve. Only you can decide if that#8217;s the right option for you; however, with what#8217;s going on with banks and the credit markets, it may pay not be your best option for your crucial cash stash. If you own a business, you should also look at your working capital. Is it adequate to take you through a slow season? If not, look for ways to cut your costs so you can shore up your cash hoard. Purchasing out of season The seasons also create opportunities for us when we#8217;re purchasing. For example, if you live where we live, you#8217;ll probably get a better deal right now on a lawn mower than a snow blower. Timing your purchase when demand is down on these bigg ticket items can save you money. Tougher times also create opportunities for us as consumers. Businesses still have bills to pay. They want to keep the doors open. So they may cut deals now that they would never consider in good times. Purchasing in season With other items, you#8217;re better off buying in season. Retailers will often lure you to their stores by drastically discounting these items. For example, isn#8217;t turkey cheaper right before Thanksgiving than any other time? Smart Money has a great article about the best time to buy everything. Planning when to buy is just as important as what you buy. Buying on impulse less often will save you bigg money more often! ___ Get the tips and tools you need to be a BIGG success! Subscribe to the Bigg Success Weekly #8211; it#8217;s FREE! ___ Next time, we ask, #8220;Are you a victim of your own success?#8221; Until then, here#8217;s to your bigg success! Subscribe to The Bigg Success Show in iTunes.#160; Subscribe to the Bigg Success feed. Related posts 6 Easy Steps To Financial Freedom Getting Aggressively Passive: Creating A Passive Income That Sets You Free (Image by tome213) Business,,Money bigginfo@biggsuccess.com no No